Hart Enterprises International, Inc. v. Anhui Provincial Import & Export Corp.

Hart Enterprises International, Inc. (Hart) (plaintiff) was a textile purchaser that entered into 12 contracts with Anhui Provincial Import & Export Corp. (Anhui) (defendant), a textile manufacturer. Under the contracts, Anhui would sell yarn to Hart. All 12 contracts were signed by a representative of Hart. The contracts included an arbitration clause stating that all disputes arising from the contracts that could not be settled through negotiation should be arbitrated by the Foreign Trade Arbitration Commission of the China Council for the Promotion of International Trade, Peking (the commission) pursuant to the commission’s rules. Disputes over the contracts arose, and in 1993 Anhui and Hart entered into a settlement agreement regarding all 12 contracts. The settlement agreement required Hart to make reduced payments to Anhui on an established payment schedule. The settlement agreement further stated that the reduced payments were a special rate, and that Anhui could claim the full amount if Hart failed to fully perform its obligations under the settlement agreement. Hart failed to make the required payments, and Anhui initiated arbitration at the commission for breach-of-contract claims. The commission notified Hart and instructed it to appoint an arbitrator. Hart did not respond, so an arbitrator was appointed on its behalf, and the arbitral tribunal was established. Hart sued Anhui in New York state court for breach-of-contract claims, and the case was removed to federal district court. Anhui moved to stay the district court proceedings until arbitration was conducted in the People’s Republic of China. Hart opposed arbitration, arguing in part that the condition precedent to arbitration requiring the failure of negotiations was not met and that the settlement agreement was entirely separate from the original contract, so the arbitration clause did not apply.